New Mexico Interior Design - Background

Litigation Backgrounder

Challenging New Mexico’s Licensing of Speech For Interior Designers

The Issue in a Nutshell:

The State of New Mexico forbids individuals who practice interior design from calling themselves interior designers unless they first obtain an expensive and increasingly difficult-to-secure license.

New Mexico law does not prevent anyone from working as an interior designer. Instead, the law achieves its anti-competitive purpose by dictating who may call themselves “interior designers” or use the term “interior design” to describe what they do. Such “titling laws” are part of a larger effort by certain members of the interior design community to suppress competition by suffocating would-be competitors with government regulations.

A case study released today by the Institute for Justice (IJ) documents a long-running campaign by the American Society of Interior Designers (ASID) and other industry organizations to increase regulation of the interior design industry in order to “increase the stature of the industry” and put would-be competitors out of business. The nationwide push for more regulation of interior designers has come not from the public or the government, but from members of the industry itself.

Only New Mexico and four other states license the terms “interior design” and “interior designer,” thereby granting certain favored members of the industry a monopoly on the use of those terms in their business names, their advertising, their websites and so on. The competitive advantages of such a speech monopoly are obvious: anyone who goes looking for an “interior designer” on the Internet or the Yellow Pages in New Mexico will find only government-licensed cartel members, while overlooking scores of highly capable designers who have not met the State’s arbitrary speech-licensing requirements.

On September 7, 2006, the Institute for Justice, a national public interest law firm that defends free speech and the rights of entrepreneurs, filed suit in the U.S. District Court for the District of New Mexico on behalf of two entrepreneurs challenging the New Mexico Interior Design Board’s censorship law as a violation of free speech rights protected by the First Amendment to the U.S. Constitution.

Americans’ right to freely express themselves most certainly includes the right to truthfully provide information to potential customers and clients. That right, enshrined in the First Amendment, cannot simply be brushed aside by States seeking to promote the anti-competitive interests of the interior design cartel. Simply put, IJ’s lawsuit will demonstrate that the First Amendment is more than mere window dressing when it comes to interior designers.

Introduction

Starting a new business is a daunting task for even the most talented and dedicated entrepreneur. And among the greatest challenges any new business faces is attracting customers. The Internet has made that task easier because now clients can find you. But imagine what would happen if the government suddenly decided that you couldn’t truthfully and accurately tell customers what business you were in. Whether on your homepage, business card or stationery, you had to come up with euphemisms for what it is you do, rather than simply stating it. You’d be out of work in no time.

Yet that is exactly what the State of New Mexico is doing to individuals in the field of interior design.

At the behest of lobbyists from the interior design industry, the government has unconstitutionally censored interior designers through so-called “titling laws”—laws that allow anyone to practice a trade, but that allow only a select few State license holders to call themselves “interior designers” or use the words “interior design” to describe what they do—even though both terms are absolutely accurate.[1]

Only New Mexico and four other states[2] license the terms “interior design” and “interior designer,” thereby granting certain favored members in the industry a monopoly on the use of those terms in their business names, their advertising, their websites and so on. The competitive advantages of such a speech monopoly are obvious: anyone who goes looking for an “interior designer” on the Internet or in the Yellow Pages in New Mexico will find only government-licensed cartel members, while overlooking scores of highly capable designers who have not met the State’s arbitrary speech-licensing requirements.

But licensing speech is repugnant to the Constitution. And in a free nation like ours, the government has no business censoring truthful commercial speech the way New Mexico does.

Adding insult to injury, New Mexico’s interior design speech ban creates a degrading barrier to entry for entrepreneurs seeking their own piece of the American Dream. New Mexico’s law relegates them to the status of second-class citizen—all to promote the blatantly anti-competitive agenda of a small faction within the interior design community.

On September 7, 2006, the Institute for Justice challenged New Mexico’s interior design censorship law as a violation of free speech rights protected by the First Amendment to the Constitution.

A National Movement to Design a Cartel

America has long recognized that citizens have the right to earn an honest living free from excessive or unreasonable government interference.[3] The most common interference with this right occurs when newcomers to a particular vocation are required to secure permission from the government in the form of a license before they may work in their chosen field. Oftentimes, these licensing schemes serve no genuine public purpose whatsoever; instead they serve as barriers to entry into particular occupations to protect industry incumbents from competition.

Not surprisingly, because industry insiders who have gotten into a field first benefit from decreased competition, they often push for increased regulation. More and more occupations are coming under government regulation—in the early 1950s only about 4.5 percent of all occupations were subject to state-level licensing, but now about 20 percent of the workforce is subject to licensing requirements.[4]

New Mexico law does not prevent anyone from working as an interior designer—indeed, the law specifically states that “[n]othing contained in the Interior Designers Act shall prevent any person from rendering or offering to render any of the services which constitute the practice of interior design.”[5] Instead, the law achieves its anti-competitive purpose by dictating who may call themselves “interior designers” or use the term “interior design” to describe what they do.[6] As explained below, such “titling laws” are part of a larger effort by certain members of the interior design community to suppress competition by suffocating would-be competitors with government regulations.

In a case study released by the Institute for Justice in 2006 titled, “Designing Cartels: How Industry Insiders Cut Out Competition,” researcher Dick Carpenter documented a long-running campaign by the American Society of Interior Designers (ASID) to increase regulation of the interior design industry in order to “increase the stature of the industry” and put would-be competitors out of business.[7] Carpenter’s meticulous research documents that the nationwide push for more regulation of interior designers has come not from the public or the government, but from members of the industry itself. According to a detailed history in the trade journal Architecture, a faction within the industry, led by the American Society of Interior Designers, began lobbying legislatures in the late 1970s for restrictions on who could work as an interior designer.[8] Those efforts were motivated by a desire to establish interior design as a profession that is distinct from and not subordinate to architects, and to suppress competition within the interior design industry by erecting substantial barriers to entry.

ASID and other interest groups leading the charge for increased regulation view titling laws, such as New Mexico’s, merely as a first step, with the ultimate goal being a full-fledged practice restriction that dictates who may and may not work as an interior designer.[9] Despite its zealous pursuit of additional licensing laws around the country, the ASID-led pro-regulation faction has met with very limited success so far, particularly regarding “practice acts.” Only four states—Alabama, Florida, Nevada and Louisiana plus the District of Columbia[10]—regulate who may perform interior design work, and of those only Alabama has a comprehensive practice act that applies to all facets of interior design work. Florida, for example, exempts residential work, while other states exempt interior design work that does not implicate building codes or bona fide health and safety concerns.

The pro-regulation contingent’s lack of success nationally is due in large part to their consistent failure to produce any credible evidence of public harm resulting from the unregulated practice of interior design—despite multiple opportunities (and strong incentives) to produce such evidence. For example, in October 2000, Colorado’s Department of Regulatory Agencies conducted an exhaustive “sunrise review” in connection with a proposal to begin regulating interior designers. As explained in the report, despite being given the opportunity, proponents of the regulation submitted no information “demonstrating that harm to the public has occurred, or that the public was endangered . . . from the unregulated practice of interior design.”[11] The Department concluded that it was “difficult to see a benefit to the public in regulating interior designers.”[12] At least eight other states have reached the same conclusion in rejecting efforts by ASID and others to enact protectionist legislation designed to eliminate competition and maintain high barriers to entry into the interior design field.[13]

Unfortunately, some state legislatures, including New Mexico’s, have blindly bought into the pro-regulation faction’s demands. New Mexico passed its titling law in 1989. The next step for the pro-regulation cartel after securing a titling law is to encourage the legislature to move from titling restrictions to a full-blown practice act, the way they did in Alabama.[14] For the moment, however, all interior designers are free to work in New Mexico, but only a small handful enjoy the privilege of truthfully advertising their services to the public. The goals of the lawsuit filed by the Institute for Justice on behalf of two New Mexico interior design entrepreneurs are not only to prevent the cartel from taking that next step toward practice regulation, but also to strike down the current law which bans the truthful exchange of information between interior designers and consumers.

The Plaintiffs—Forbidden to Speak Truthfully

Working in interior design had long been Sherry Franzoy’s dream. But it wasn’t until after a divorce, when she was suddenly thrust in the position of having to provide for herself, that she finally pursued that dream. With the nearest design school more than 200 miles away, however, even if the Las Cruces native could have afforded the time and expense of attending school, her dream still seemed out of reach. Thankfully, Sherry learned of a franchising opportunity with Interiors by Decorating Den, an international company with more than 500 franchises in operation.

Interiors By Decorating Den has high standards for its franchisees. Before being allowed to open a store, Sherry had to pass five rigorous tests covering the spectrum of operating an interior design business, including interior design work, people skills, finance, entrepreneurship and business math. Sherry passed those tests and opened her store in 2000.

Sherry is celebrating her sixth year in the business she runs out of a home office and a van emblazoned with the “Interiors by Decorating Den” logo. She loves what she does. Sherry specializes in working with the many “transplants” who flock to the Southwest from other parts of the country and need insight on how to design and decorate their homes to fit in with the Southwestern style. Sherry provides that insight and has a long list of happy and satisfied customers.

Caryn Armijo began her work in interior design as a second career after working at the University of New Mexico for 25 years. She retired in 1995 and in 2000 opened Caryn Armijo Interiors. To improve her business and her knowledge of the industry, in 2001 Caryn began studying interior design through the Sheffield School of Interior Design, a distance-learning center based in New York. Over a three-year period, Caryn completed the Sheffield course of study—an extensive, step-by-step course in interior design involving written, audio and video media. Sheffield’s distance-learning program enables participants to have their work reviewed by professional designers each step of the way. Caryn’s experience with Sheffield—as well as her love of the industry and her determination—have allowed her to maintain a successful business offering services throughout the Albuquerque area for the past six years.

Caryn strongly objects to the idea that her speech can be licensed by the State, and she refuses to take the State-mandated licensing exam or fulfill the State’s other arbitrary licensing requirements simply so she can refer to herself, accurately, as an interior designer. She finds the censorship outrageous and even degrading because it automatically relegates her to second-class status within the industry, and suggests, falsely, that she is not a interior designer, which she most certainly is.

As a result of New Mexico’s licensing of speech, Sherry and Caryn must choose between running afoul of the censors at the Interior Design Board if they truthfully advertise themselves as interior designers, or using various euphemisms to advertise their business that suggest—falsely—that they are something other than highly experienced, talented and well-established interior designers.

Getting a License to Speak in New Mexico

New Mexico’s speech-licensing requirements for interior designers are not easy to meet. First, applicants must pass an exam administered not by the State, but by a private, national credentialing body called the National Council for Interior Design Qualification (NCIDQ). But not just anyone may take the NCIDQ exam. Just to sit for the exam, NCIDQ requires people to have six years combined college-level interior design education and work experience.[15] That education/experience requirement is reflected in New Mexico law, which likewise provides that applicants for an interior design free-speech license must either have six years total experience and education from an “accredited institution” or an eight-yearapprenticeship under a designer who has passed the NCIDQ exam described above.[16] Essentially, what New Mexico has fashioned is a guild of interior designers.

The education/experience requirement is gradually becoming more difficult for would-be interior designers to successfully navigate. Currently, designers may gain work experience with their own businesses, and may acquire education and experience in any order. Beginning with applications submitted after January 1, 2007, however, applicants may begin their work experience only after completing their education (for those with less than a bachelor’s degree). Applicants who begin acquiring work experience after January 1, 2008, must work under the direct supervision of someone already holding an NCIDQ Certificate.[17] And, according to ASID, “[b]y the end of the decade, NCIDQ will require the Interior Design Experience Program,” which is the NCIDQ’s own internship program “for all examination candidates.”[18] So, within the next few years, applicants for the NCIDQ exam will not even have the individual choice of how best to get the work experience, which will be relevant to their future careers.

NCIDQ’s exam is expensive. With combined application and testing fees, the cost can reach about $1,000. It is also time-consuming. The exam covers three separate areas over two days. The three areas tested are: principles and practices of interior design; contract documents and administration; and schematics and design development.[19]

Once an aspiring designer passes the NCIDQ exam, he or she may then apply to the New Mexico Interior Design Board for an interior design license, which, again, is actually a speech license to use the term “interior designer”—not a license to practice interior design, for which there is no licensing requirement. This involves an additional expense of $200 for the initial application fee and an annual renewal fee of $250—just to get permission from the State to use the magic words “interior designer.”[20]

Legal Challenge

The Institute’s legal challenge is straightforward: prohibiting people from truthfully describing what they do—interior design—violates their First Amendment right to free expression. With very narrow exceptions, all types of speech are protected by the Constitution, including so-called “commercial speech” that “does no more than propose a commercial transaction.”[21] Thus, to regulate advertising, the government must have a substantial reason for restricting speech, and any limits must be carefully designed to actually achieve the government’s objectives while having only the narrowest infringement on speech.[22]

New Mexico’s “titling law” for interior designers falls woefully short of those stringent legal standards. Instead of advancing any bona fide public purpose, titling laws are merely the first step in a carefully crafted strategy to suppress competition within the industry. As noted above, many other States have rejected similar efforts due in large part to the total lack of evidence that there is any public harm from the unregulated practice of interior design.

Besides showing there is a substantial government interest in censoring truthful speech by unlicensed interior designers, New Mexico will have to prove that its titling act directly advances the State’s asserted goals, whatever those might be, in a manner that is no broader than necessary to achieve them. New Mexico will not be able to make that showing because there is simply no threat to the public from truthful communications and advertising by interior designers—whether or not they hold a license to speak from the State of New Mexico—about what they do.

Americans’ right to freely express themselves most certainly includes the right to truthfully provide information to potential customers and clients. That right, enshrined in the First Amendment to the U.S. Constitution, cannot simply be brushed aside by States seeking to promote the anti-competitive interests of the interior design cartel. Simply put, this lawsuit will demonstrate that the First Amendment is more than mere window dressing when it comes to interior designers.

The Defendants

The defendants in this case are the five members of the New Mexico Interior Design Board, who are being sued in their official capacities. The Board, located in Santa Fe, is responsible for registration and regulation of interior designers in New Mexico. Of the five Board members, two are professional members in the industry and three are “public” members.

IJ: A History of Protecting Free Speech & Economic Liberty

Founded in 1991, the Institute for Justice (IJ) has represented entrepreneurs nationwide who successfully fought arbitrary government regulation, opening up long-closed markets and securing free speech rights. These include:

Swedenburg v. Kelly[23]—Representing Virginia and California vintners as well as New York wine consumers, the Institute for Justice persuaded the U.S. Supreme Court to declare unconstitutional New York State’s laws that barred the interstate direct shipment of wine to New York consumers. IJ also persuaded the 2nd U.S. Circuit of Court of Appeals to enforce the First Amendment by striking down a prohibition on advertisements and solicitation for alcoholic beverages by anyone other than licensed retailers.

Taucher v. Born[24]—The Institute for Justice persuaded the U.S. District Court for the District of Columbia to enforce the First Amendment by striking down a regulation issued by the Commodity Futures Trading Commission that would have required publishers of financial newsletters and Internet websites to register as commodity trading advisors.

Crockett v. Minnesota Department of Public Safety—The Institute for Justice Minnesota Chapter entered into a consent judgment with the U.S. District Court for the State of Minnesota that dictated the State could not constitutionally enforce a law that forbade wineries across the country from accepting online orders from Minnesotans. The State also conceded that it could not constitutionally prohibit wineries from truthfully advertising or soliciting the direct sale and shipment of wine, and that it could not constitutionally discriminate between in-state and out-of-state wineries (or between wineries and liquor stores) when they exercise their First Amendment rights to communicate with Minnesota consumers.

ForSaleByOwner.com Corp. v. Zinnemann[25]—The Institute for Justice persuaded the U.S. District Court for the Eastern District of California to enforce the First Amendment and strike down the State of California’s attempt to impose real estate broker licensing requirements on an informational website.

Wexler v. City of New Orleans[26]—The Institute for Justice persuaded the U.S. District Court for the Eastern District of Louisiana to enforce the First Amendment by striking down an ordinance that prohibited booksellers from selling books on city sidewalks without a permit.

Battaglieri v. Mackinac Center For Public Policy[27]—The Institute for Justice successfully defended on First Amendment grounds an invasion of privacy claim against a public policy research institute that accurately quoted a representative of the Michigan Educational Association in a letter to supporters.

Rissmiller v. Arizona Structural Pest Control Commission­—The Institute’s Arizona Chapter filed suit in 2005 challenging the Structural Pest Control Commission’s requirement that gardeners and landscapers providing weed control services must first demonstrate 3,000 hours of experience spraying weeds. As a result of the lawsuit, the Arizona Legislature passed, and the governor signed into law on May 8, 2006, an exemption for providers of weed control services using products available to the general public over the counter.

Anderson v. Minnesota Board of Barber and Cosmetology Examiners—Filed in 2005 in the Hennepin County District Court, this case challenged Minnesota’s cosmetology regulations, which required African hairbraiders to enroll in 1,550 hours of government-mandated “training,” none of which included even one hour of instruction in braiding. As a result of IJ’s litigation, hairbraiders in the state may now practice without obtaining a license.

Armstrong v. Lunsford—Filed in 2004 in the U.S. District Court for the Southern District of Mississippi, this case challenged Mississippi’s cosmetology regulations, which barred braiders from practicing their craft. Prior to receiving a ruling from the court, the Mississippi Legislature exempted braiders from the cosmetology licensing requirement in 2005. This result allows IJ’s client to continue to practice without obtaining an irrelevant license.

Christian Alf v. Arizona Structural Pest Control Commission—In 2004, based on the Institute for Justice Arizona Chapter’s work in the court of public opinion, the Commission changed its position on requiring teenage entrepreneur Christian Alf to obtain a license for his after-school handyman business helping local residents prevent roof rats.

Farmer v. Arizona Board of Cosmetology—In 2004, as a result of an IJ-AZ lawsuit, the Arizona Legislature exempted hairbraiders from the State’s outdated cosmetology scheme.

Craigmiles v. Giles—This IJ suit led a federal court to strike down Tennessee’s casket-sales licensing scheme as unconstitutional, a decision that was upheld unanimously by the U.S. 6th Circuit Court of Appeals and not appealed. This marked the first federal appeals court victory for economic liberty since the New Deal.

Jones v. Temmer—In 1995, IJ helped three entrepreneurs overcome Colorado’s protectionist taxicab monopoly to open Denver’s first new cab company in nearly 50 years. IJ also helped break open government-sanctioned taxicab monopolies in Indianapolis and Cincinnati.

Uqdah v. D.C. Board of Cosmetology—In 1993, IJ’s work in court and the court of public opinion led the District of Columbia to eliminate a 1938 Jim Crow-era licensing law against African hairbraiders.

The Litigation Team

The lead attorney in this case is Institute for Justice Arizona Chapter Staff Attorney Jennifer Perkins, who litigates First Amendment and economic liberty cases in Arizona and New Mexico. Most recently, Perkins worked to free gardeners and landscapers in Arizona from absurd licensing requirements. She will be joined in the litigation by Clark Neily, senior attorney at the Institute for Justice’s headquarters office in Arlington, Va. Neily litigates economic liberty cases nationwide. Assisting the Institute for Justice as local counsel is Phil Cheves of the Barnett Law Firm in Albuquerque.

[3]Truax v. Raich, 239 U.S. 33, 41 (1915) (recognizing that “the right to work for a living in the common occupations of the community is of the very essence of the personal freedom and opportunity” that the Constitution was designed to protect); Supreme Court of New Hampshire v. Piper, 470 U.S. 274, 279-81 & n.10 (1985); Hampton v. Mow Sun Wong, 426 U.S. 88, 101-03 (1976); Meyer v. Nebraska, 262 U.S. 390, 399 (1923).

[12] Colorado Sunrise Review at 22; see also Sunrise Review of Interior Designers, Report to House Committee on Commerce and Labor, Washington State Dept. of Licensing, Dec. 2005 at 12 (hereafter Washington Sunrise Review) (“Current evidence does not suggest the public is being harmed by non-regulation”).

[13]See, AIA Government Affairs, Licensing Discussion Materials, Mar. 1, 2002 at 4-5 (summarizing rejection of pro-licensing efforts in Colorado, California, New Jersey, Connecticut, Ohio, South Carolina and Virginia) available at http://www.aianewmexico.org/WebSiteResources/LicensingMaterials.pdf, (last visited March 16, 2006). An updated version of this document adds Maryland and Georgia to the list of states that have rebuffed efforts to seek regulation of interior designers. See http://www.aia- ri.org/The%205%20Standards%20of%20Professional%20Regulation-2003%20update.doc (last visited March 16, 2006).